April 01, 2015
Supplier Relationship Management
Developing an effective Supplier Relationship Management system is far more extensive than any software program and a key tool for supply management professionals is to really talk to their stakeholders and suppliers and encourage them to become involved more deeply in the business. The stakeholder becomes aware of the value and importance of developing essential mutually beneficial relationships where each party has something to gain when their partner succeeds. Communicating and educating your stakeholders is essential and ought to be followed as a principle with your suppliers. Proactively seeking ways to educate your stakeholders and suppliers helps probe key problems, improve methodologies, and align expectations and efforts throughout a supply chain.
Determining which suppliers are invested enough to enter into a partnership and share risks with your company will help your business gain speed and continue on in the path of partnership. Performance Based Contracts in particular help ensure that business relationships with a selected supplier are well understood and allow greater alignment of goals. Various frameworks exist that allow effective Supplier Relationship Management, but whichever is used it is important to leave communication channels open, remain flexible, and adapt as is most beneficial for both the supplier and your company. Some commonly reported issues surrounding Supplier Relationship Management include;
SRM key issues
(1) Relationships between individual buyers and sellers instead of companies (longevity)
(2) Over reliance on existing contracts
(3) Failure to identify value creating alternatives
(4) Lack of substantial relationship management tools
In order to combat these and other issues surrounding Supplier Relationship Management, new approaches to SRM must be adopted.
(1) Contracts should be frequently reevaluated regarding their validity in the current market and respective situations of suppliers and buyers.
(2) Supplier databases and contact methods should be updated to replace the pen and paper, cold calling, business card practices that have dominated SRM for so long.
(3) Tools for collaboration, bidding, and keeping suppliers fully up to date ought to be utilized.
(4) Relationships between each organization ought to be put first so collaborative and alliance relationships can be developed even if it requires greater investment or flexibility in the short run.